The Welfare Effects of Entry and Strategies for Maintaining the USO in the Postal Sector

Michael A. Crew and Paul R. Kleindorfer
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Michael A. Crew: Rutgers University
Paul R. Kleindorfer: University of Pennsylvania

Chapter Chapter 1 in Progress toward Liberalization of the Postal and Delivery Sector, 2006, pp 3-22 from Springer

Abstract: Abstract The debate on entry policies in the postal sector has centered on how to continue to provide Universal Service without undermining the financial viability of the incumbent Postal Operator (PO). The debate continues as the European Commission conducts a prospective study, as required by the Postal Service Directive, to assess the impact on universal service of complete liberalization in 2009 for each member state. However, several member states have already entered a very clear path leading to full liberalization ahead of this date.1 This presents a potentially serious problem in that unless the Universal Service Obligation (USO) is eliminated, POs will still have to satisfy the USO without the traditional reserved area. In addition, incumbent POs will face continuing challenges in setting the terms of access offered to entrants. Pricing and contracting will become much more competitive, and access policies will have to take into account increasingly important competitive concerns with the revenue required to maintain the USO. Finding a workable solution to these problems is critical since if inappropriate policy choices are made, the changes that are then ushered in could be extremely costly to undo.

Keywords: Postal Operator; Welfare Effect; Uniform Price; Reserved Area; Financial Viability (search for similar items in EconPapers)
Date: 2006
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DOI: 10.1007/978-0-387-29744-6_1

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